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Golub Capital BDC, Inc. Declares Fiscal Year 2018 First Quarter Distribution of $0.32 Per Share, a Special Distribution of $0.08 Per Share and Announces Fiscal Year 2017 Fourth Quarter Financial Results

NEW YORK, Nov. 20, 2017 /PRNewswire/ -- Golub Capital BDC, Inc., a business development company (NASDAQ: GBDC), today announced its financial results for its fourth fiscal quarter ended September 30, 2017.

Except where the context suggests otherwise, the terms "we," "us," "our," and "Company" refer to Golub Capital BDC, Inc. and its consolidated subsidiaries. "GC Advisors" refers to GC Advisors LLC, our investment adviser.

SELECTED FINANCIAL HIGHLIGHTS








(in thousands, expect per share data)





September 30, 2017


June 30, 2017

Investment portfolio, at fair value

$

1,685,015



$

1,801,808


Total assets

$

1,754,176



$

1,855,039


Net asset value per share

$

16.08



$

16.01







Quarter Ended


September 30, 2017


June 30, 2017

Investment income

$

34,950



$

35,408


Net investment income

$

18,238



$

17,808


Net gain (loss) on investments and secured borrowings

$

4,215



$

2,303


Net increase in net assets resulting from operations

$

22,453



$

20,111






Earnings per share

$

0.38



$

0.35


Net gain (loss) on investments and secured borrowings per share

$

0.07



$

0.04


Net investment income per share

$

0.31



$

0.31


Accrual for capital gain incentive fee per share

$

0.01



$

0.01


Net investment income before capital gain incentive fee accrual per share (1)

$

0.32



$

0.32






(1) As a supplement to U.S. generally accepted accounting principles ("GAAP") financial measures, the Company has provided this non-GAAP financial
measure. The Company believes that this non-GAAP financial measure is useful as it excludes the accrual of the capital gain incentive fee, which is not
contractually payable under the terms of the Company's investment advisory agreement with GC Advisors.

Fourth Fiscal Quarter 2017 Highlights

  • Net increase in net assets resulting from operations for the quarter ended September 30, 2017 was $22.5 million, or $0.38 per share, as compared to $20.1 million, or $0.35 per share, for the quarter ended June 30, 2017;
  • Net investment income for the quarter ended September 30, 2017, was $18.3 million, or $0.31 per share, as compared to $17.8 million, or $0.31 per share, for the quarter ended June 30, 2017;
  • Net investment income for the quarter ended September 30, 2017, excluding a $0.8 million accrual for the capital gain incentive fee under GAAP, was $19.1 million, or $0.32 per share, as compared to $18.4 million, or $0.32 per share, excluding a $0.6 million accrual for the capital gain incentive fee under GAAP, for the quarter ended June 30, 2017;
  • Net gain on investments and secured borrowings for the quarter ended September 30, 2017 was $4.2 million, or $0.07 per share, as compared to a net gain of $2.3 million, or $0.04 per share, for the quarter ended June 30, 2017; and
  • Our board of directors declared on November 17, 2017 a quarterly distribution of $0.32 per share and a special distribution of $0.08 per share both of which are payable on December 28, 2017 to stockholders of record as of December 12, 2017.

Portfolio and Investment Activities

As of September 30, 2017, the Company had investments in 185 portfolio companies with a total fair value of $1,590.0 million and had investments in Senior Loan Fund LLC ("SLF") with a total fair value of $95.0 million. This compares to the Company's portfolio as of June 30, 2017, as of which date the Company had investments in 188 portfolio companies with a total fair value of $1,692.9 million and investments in SLF with a total fair value of $108.9 million. Investments in portfolio companies as of September 30, 2017 and June 30, 2017 consisted of the following:



As of September 30, 2017


As of June 30, 2017



Investments


Percentage of


Investments


Percentage of

Investment


at Fair Value


Total


at Fair Value


Total

Type


(In thousands)


Investments


(In thousands)


Investments

Senior secured


$

195,029



11.6

%


$

192,123



10.7

%

One stop


1,334,084



79.2



1,429,917



79.4


Second lien


9,434



0.6



9,434



0.5


Subordinated debt


59



0.0

*


58



0.0

*

LLC equity interests in SLF


95,015



5.6



108,879



6.0


Equity


51,394



3.0



61,397



3.4


Total


$

1,685,015



100.0

%


$

1,801,808



100.0

%



















* Represents an amount less than 0.1%.

The following table shows the asset mix of our new investment commitments for the three months ended September 30, 2017:


For the three months ended September 30, 2017


New Investment




Commitments


Percentage of


(In thousands)


Commitments





Senior secured

$

18,120



14.0

%

One stop

109,234



84.8


Equity securities

1,514



1.2


Total new investment commitments

$

128,868



100.0

%





Overall, total investments at fair value decreased by 6.5%, or $116.8 million, during the three months ended September 30, 2017 after factoring in debt repayments, sales of securities, net fundings on revolvers and net change in unrealized gain (loss). Total investments at fair value held by SLF decreased by 6.6%, or $21.3 million, after factoring in debt repayments, sales of securities, net fundings on revolvers and net change in unrealized gain (loss).

For the three months ended September 30, 2017, the weighted average annualized investment income yield (which includes interest and fee income and amortization of capitalized fees and discounts) and the weighted average annualized income yield (which excludes income resulting from amortization of capitalized fees and discounts) on the fair value of earning portfolio company investments in the Company's portfolio were 8.5% and 7.8%, respectively.

Consolidated Results of Operations

Total investment income for the quarters ended September 30, 2017 and June 30, 2017 was $35.0 million and $35.4 million, respectively. This $0.4 million decrease was primarily attributable to lower fee income from prepayments during the quarter ended September 30, 2017.

Total expenses for the quarters ended September 30, 2017 and June 30, 2017 were $16.7 million and $17.6 million, respectively. This $0.9 million decrease was primarily attributable to a decrease in the incentive fee due to lower investment income.

During the quarter ended September 30, 2017, the Company recorded a net realized gain of $11.0 million and recorded net unrealized depreciation of $6.8 million. The net realized gain was primarily due to the sale of nine equity investments and the sale of portfolio company investments to SLF. The net unrealized depreciation was due to the reversal of unrealized appreciation associated with the sale of the portfolio company investments driving the realized gain partially offset by the rise in market prices on several middle market debt and equity investments.

Liquidity and Capital Resources

The Company's liquidity and capital resources are derived from the Company's debt securitizations, U.S. Small Business Administration ("SBA") debentures, revolving credit facilities and cash flow from operations. The Company's primary uses of funds from operations include investments in portfolio companies and payment of fees and other expenses that the Company incurs. The Company has used, and expects to continue to use, its debt securitizations, SBA debentures, revolving credit facilities, proceeds from its investment portfolio and proceeds from offerings of its securities and its dividend reinvestment plan to finance its investment objectives.

As of September 30, 2017, the Company had cash and cash equivalents of $4.0 million, restricted cash and cash equivalents of $58.6 million and $781.1 million of debt and secured borrowings outstanding. As of September 30, 2017, the Company had $161.9 million of remaining commitments and $95.0 million available for additional borrowings on its senior secured revolving credit facility with Wells Fargo Bank, N.A., as lender and administrative agent ("Credit Facility"), subject to leverage and borrowing base restrictions. As of September 30, 2017, through our SBIC licensees, we had $58.0 million of debenture commitments, of which $30.0 million was available to be drawn, subject to customary SBA regulatory requirements.

On September 28, 2017, Golub Capital BDC Funding LLC, a wholly owned subsidiary of the Company ("Funding"), entered into an amendment to the Credit Facility which amendment, was effective as of September 28, 2017 and, among other things, (a) extended the expiration of the reinvestment period from September 27, 2017 to September 27, 2018, during which period Funding, subject to certain conditions, may make borrowings under the facility and (b) extended the stated maturity date from September 28, 2020 to September 28, 2022. The other material terms of the Credit Facility were unchanged.

On November 17, 2017, the Board declared a quarterly distribution of $0.32 per share and a special distribution of $0.08 per share both of which are payable on December 28, 2017 to holders of record as of December 12, 2017.

Portfolio and Asset Quality

GC Advisors regularly assesses the risk profile of each of the Company's investments and rates each of them based on an internal system developed by Golub Capital and its affiliates. This system is not generally accepted in our industry or used by our competitors. It is based on the following categories, which we refer to as GC Advisors' internal performance ratings:




Internal Performance Ratings

Rating


Definition

5


Involves the least amount of risk in our portfolio. The borrower is performing above expectations, and
the trends and risk factors are generally favorable.




4


Involves an acceptable level of risk that is similar to the risk at the time of origination. The borrower is
generally performing as expected, and the risk factors are neutral to favorable.




3


Involves a borrower performing below expectations and indicates that the loan's risk has increased
somewhat since origination. The borrower may be out of compliance with debt covenants; however,
loan payments are generally not past due.




2


Involves a borrower performing materially below expectations and indicates that the loan's risk has
increased materially since origination. In addition to the borrower being generally out of compliance
with debt covenants, loan payments may be past due (but generally not more than 180 days past due).




1


Involves a borrower performing substantially below expectations and indicates that the loan's risk has
substantially increased since origination. Most or all of the debt covenants are out of compliance and
payments are substantially delinquent. Loans rated 1 are not anticipated to be repaid in full and we will
reduce the fair market value of the loan to the amount we anticipate will be recovered.

Our internal performance ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or represent or reflect any third-party assessment of any of our investments.

The following table shows the distribution of the Company's investments on the 1 to 5 internal performance rating scale at fair value as of September 30, 2017 and June 30, 2017:












September 30, 2017


June 30, 2017

Internal


Investments


Percentage of


Investments


Percentage of

Performance


at Fair Value


Total


at Fair Value


Total

Rating


(In thousands)


Investments


(In thousands)


Investments

5


$

91,525



5.5

%


$

212,063



11.8

%

4


1,378,316



81.8



1,377,526



76.5


3


212,629



12.6



209,231



11.6


2


249



0.0

*


240



0.0

*

1


2,296



0.1



2,748



0.1


Total


$

1,685,015



100.0

%


$

1,801,808



100.0

%
















* Represents an amount less than 0.1%.

Conference Call

The Company will host an earnings conference call at 11:00 a.m. (Eastern Time) on Tuesday, November 21, 2017 to discuss the quarterly financial results. All interested parties may participate in the conference call by dialing (800) 410-4983 approximately 10-15 minutes prior to the call; international callers should dial (303) 223-4360. Participants should reference Golub Capital BDC, Inc. when prompted. For a slide presentation that we intend to refer to on the earnings conference call, please visit the Investor Resources link on the homepage of our website (www.golubcapitalbdc.com) and click on the Quarter Ended 9.30.17 Investor Presentation under Events/Presentations. An archived replay of the call will be available shortly after the call until 1:00 p.m. (Eastern Time) on December 21, 2017. To hear the replay, please dial (800) 633-8284. International dialers, please dial (402) 977-9140. For all replays, please reference program ID number 21859906.

Golub Capital BDC, Inc. and Subsidiaries




Consolidated Statements of Financial Condition




(In thousands, except share and per share data)









September 30, 2017


June 30, 2017

Assets

(audited)


(unaudited)

Investments, at fair value (cost of $1,671,239 and $1,781,227, respectively)

$

1,685,015



$

1,801,808


Cash and cash equivalents

3,988



12,827


Restricted cash and cash equivalents

58,570



33,042


Interest receivable

6,271



5,871


Receivable from investments sold



1,317


Other assets

332



174


Total Assets

$

1,754,176



$

1,855,039






Liabilities




Debt

$

781,100



$

883,400


Less unamortized debt issuance costs

4,273



4,284


Debt less unamortized debt issuance costs

776,827



879,116


Secured borrowings, at fair value (proceeds of $0 and $403, respectively)



406


Interest payable

3,800



6,274


Management and incentive fees payable

13,215



13,404


Accounts payable and accrued expenses

2,312



2,264


Payable for open trades



5,294


Accrued trustee fees

76



62


Total Liabilities

796,230



906,820






Net Assets




Preferred stock, par value $0.001 per share, 1,000,000 shares authorized, zero shares issued
and outstanding as of September 30, 2017 and June 30, 2017




Common stock, par value $0.001 per share, 100,000,000 shares authorized, 59,577,293 and
59,235,174 shares issued and outstanding as of September 30, 2017 and June 30, 2017,
respectively

60



59


Paid in capital in excess of par

939,269



932,970


Undistributed net investment income

3,074



3,862


Net unrealized appreciation (depreciation) on investments and secured borrowings

16,444



23,247


Net realized gain (loss) on investments

(901)



(11,919)


Total Net Assets

957,946



948,219


Total Liabilities and Total Net Assets

$

1,754,176



$

1,855,039






Number of common shares outstanding

59,577,293



59,235,174


Net asset value per common share

$

16.08



$

16.01










Golub Capital BDC, Inc. and Subsidiaries





Consolidated Statements of Operations





(In thousands, except share and per share data)







Three months ended



September 30, 2017


June 30, 2017



(unaudited)


(unaudited)

Investment income



Interest income


$

33,549



$

33,249


Dividend income


1,066



1,169


Fee income


335



990







Total investment income


34,950



35,408







Expenses





Interest and other debt financing expenses


8,155



8,099


Base management fee


6,072



6,059


Incentive fee


1,285



2,073


Professional fees


461



638


Administrative service fee


620



595


General and administrative expenses


119



136







Total expenses


16,712



17,600







Net investment income


18,238



17,808







Net gain (loss) on investments and secured borrowings





Net realized gain (loss) on investments


11,018



(3,209)


Net change in unrealized appreciation (depreciation) on investments
and secured borrowings


(6,803)



5,512







Net gain (loss) on investments and secured borrowings


4,215



2,303







Net increase in net assets resulting from operations


$

22,453



$

20,111







Per Common Share Data





Basic and diluted earnings per common share


$

0.38



$

0.35


Dividends and distributions declared per common share


$

0.32



$

0.32


Basic and diluted weighted average common shares outstanding


59,448,470



57,719,505


ABOUT GOLUB CAPITAL BDC, INC.

Golub Capital BDC, Inc. ("Golub Capital BDC") is an externally-managed, non-diversified closed-end management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. Golub Capital BDC invests primarily in senior secured and one stop loans of U.S. middle-market companies that are often sponsored by private equity investors. Golub Capital BDC's investment activities are managed by its investment adviser, GC Advisors LLC, an affiliate of the Golub Capital group of companies ("Golub Capital").

ABOUT GOLUB CAPITAL

Golub Capital is a nationally recognized credit asset manager with over $20 billion of capital under management. For over 20 years, the firm has provided credit to help medium-sized U.S. businesses grow. The firm's award-winning middle market lending business helps provide financing for middle market companies and their private equity sponsors. Golub Capital's credit expertise also forms the foundation of its Late Stage Lending and Broadly Syndicated Loan businesses. Golub Capital has worked hard to build a reputation as a fast, reliable provider of compelling financing solutions, and we believe this has inspired repeat clients and investors. Today, the firm has over 300 employees with lending offices in Chicago, New York and San Francisco. For more information, please visit www.golubcapital.com.

FORWARD-LOOKING STATEMENTS

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those expressed or implied in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission. Golub Capital BDC, Inc. undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

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SOURCE Golub Capital BDC, Inc.